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Global demand for coal will continue to grow in the next five years, albeit at a more modest pace, the International Energy Agency said Monday in its medium-term outlook for the fuel.

Bloomberg

Demand will grow 2.3% a year through 2018, compared with a 2012 forecast of 2.6% for the five years through 2017 and actual growth rate of 3.4% a year between 2007 and 2012.

“Like it or not, coal is here to stay for a long time to come,” IEA Executive Director Maria van der Hoeven said. “Coal is abundant and geopolitically secure, and coal-fired plants are easily integrated into existing power systems.”

Although it is “easy to see” why coal demand continues to grow, it is “equally important to emphasize that coal in its current form is simply unsustainable,” she added.

Shares of Consol Energy Inc. fell as much as 4% in early trading Monday following news it will sell five coal mines to focus on natural gas, but investors reconsidered their negative reaction and shares were recently off 0.5%.

Murray will pay $850 million in cash and also assume about $2.4 billion in labor and environmental liabilities. Consol will also receive about $184 million in future royalty payments for shipping the coal out of a terminal in Baltimore.

The mines are estimated to hold about $1.1 billion in coal reserves. Consol hopes to to save about $65 million a year in administrative costs.

But perhaps more irking for shareholders, dividends will be reduced by half to “reflect the company’s increased emphasis on growth.”

The International Energy Agency tweeted this chart about electricity trends to 2035.

Not that surprisingly, it shows renewables and natural gas really taking off, with renewables surpassing natural gas as source of power over the next couple of years. By 2035, renewables will be giving coal a run for the money.

What surprised us, however, was the coal’s durability. It will remain the top fuel for generating electricity for the next 20 years, with growth in coal-fired power in emerging markets outweighing its decline in rich countries, the IEA said.

It’s easy to be overwhelmed by the magnitude of our dependence on fossil fuels, but there are signs that’s changing, he writes.

Chinese coal imports are cooling as lower economic growth there “tag teams” with public anger about air pollution.

China is still the world’s largest consumer of coal, though — coal demand growth in the last five years comes from mostly China, and India to a lesser degree. From 2017 on, however, coal consumption is expected to be on the wane.

Standards announced Friday to limit carbon emissions from new power plants effectively kill off new coal-fired plants, but from a practical standpoint new plants were already going the way of the coal scuttle mostly due to competition with natural gas.

AFP/Getty Images

Experts say that natural gas prices would have to cost anywhere between $7 per million British thermal units to $10 per million Btus to make new coal-fired plants feasible. On Friday, natural gas futures prices hovered around $3.75 per million Btus.

The standards announced Friday were even a little less stringent than what was proposed a year ago: the Environmental Protection Agency has proposed a limit of 1,100 of carbon dioxide per megawatt hour for coal-fired power plants; a year ago, the standard on the table was 1,000 pounds of CO2 per megawatt‐hour.

The limit is 100 pounds easier to meet, but in reality just as impossible.

Shares of major coal producers headed lower Friday after the Environmental Protection Agency proposed tough requirements for new coal plants and said it would look into curbing emissions from existing power plants.

The proposal won’t immediately affect power plants already in operation, but it would eventually lead to curbing emissions from existing plants. The EPA has until next summer to propose such regulations.

Consol Energy Inc., a key coal stock exposed to the domestic market, gained Wednesday amid a report the U.S. Environmental Protection Agency is close to requiring new coal plants to install expensive equipment to curb emissions.

For about a year, investors had assumed new coal plants would not be viable options — so a change from that is at least a mild positive, analysts said.

Peabody Energy

The EPA is close to issuing a proposal spelling out the requirement for pricey equipment, this story on Bloomberg said, citing people familiar with the plan.

The EPA has agreed to revise last year’s proposal that utilities and coal producers said would effectively kill coal as an energy source, but the new version would offer “little solace” to the industry, the story said.

Coal inventories at power plants in April dropped below the five-year average, the first time since December 2011, the Energy Information Administration said.

Total coal consumption rose 11% in the first quarter of the year compared with the year-go period, the EIA added.

A colder-than-usual winter and, more recently, heat waves across parts of the nation have pushed natural-gas prices higher and nudged those power plants that can to switch over to cheaper coal.

The increase in demand didn’t boost sales for coal miners, however. Instead, power plants are meeting demand by drawing on their own inventories, the EIA said. The agency is predicting the coal market will remain weak through the rest of the year, ending 2013 with essentially flat production.

Stocks of coal miners have outperformed in July, recouping some of the ground lost in previous months.

Wood was America’s original renewable energy and coal has had at least one renaissance, this Energy Information Administration graph in honor of the Fourth of July holiday shows.

Wood was a typical American family’s source of energy until the mid- to late-1800s, and U.S. industrial might was originally powered by built on waterwheels. Coal stole the show in the late 19th century, only to be overtaken by petroleum products in the late 1940s and early 1950s.

One thing has remained constant over the past 100 years: the three major fossil fuels — crude, natural gas, and coal — “have dominated the U.S. fuel mix,” the EIA said. They are expected to keep that dominance for the next three decades.

Coal has surged ahead as the fuel of choice in power generation, with preliminary government data showing old King Coal generating 40% or more of the U.S. electricity each month from November to March. Natural gas fueled 25% of generation in the same period.

Coal has gained ground since May 2012, as a combination of higher natural-gas prices and increased demand for electricity in the summer months led utilities to switch some plants to coal use.

Natural-gas prices have gained nearly 30% in the past three months, and 49% in the past 12 months. Prices hit a string of 10-year lows in March of last year, on a supply glut and mild weather, but started to pick up steam later in the year. As prices rose, power plants started to switch to cheaper coal.

Despite the recent uptick, coal’s share of total electricity generation remains “well below” a typical range before 2009, the EIA said. In the seven years to 2008, coal’s share of total generation ranged from 48% to 51%; the fuel last got to a 50% share in 2005. It is expected to end this year with a 40% share, the EIA said.

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